Europe's Competitiveness Comeback: 6 Battlegrounds Every Business Leader Must Watch

Paris, France, Source :

What happens when the old economic certainties fade? You build new ones. Ursula von der Leyen took the stage at La Rencontre des Entrepreneurs de France, held at Roland Garros, and delivered a straightforward message to business leaders: Europe will produce, invest and protect. The old certainties included cheap imported energy, open world trade, automatic access to China's market, strategic American protection and Western technological dominance. The new direction is built on six battlegrounds, and each one comes with a concrete plan.

Fair competition comes first. European businesses have been paying twice, once for their own rules, and once for competitors who do not face the same costs. The European Commission is targeting a 25% cut in administrative burdens for all companies and 35% for SMEs by 2029. Twelve omnibus simplification packages could save around €17 billion a year. Six are already agreed and saving €6 billion. That is paperwork relief with a direct impact on competitiveness. Member states are also being encouraged to stop gold-plating national rules.

Fair competition starts at home, and extends beyond. Chinese state support for companies can reach eight times the OECD average. Chinese imports into the EU have climbed 45% in five years, while EU exports to China have fallen. The trade deficit now approaches €1 billion a day, and for the first time every EU member state has a deficit with China. More than half of European industrial production faces Chinese competition. The EU has opened more than 30 trade defence investigations in one year, nearly three times the long-term average, and current measures protect more than 600,000 European jobs.

Raw materials are part of the same picture. Europe depends on China for more than 80% of many critical raw materials and 90% of some rare earths. The response is an economic security policy that keeps markets open, with trade defence instruments available when dialogue is not enough.

The second battleground is financing. Europe does not lack capital, and around €10 trillion in household savings is sitting in bank accounts. What if a meaningful share of that capital started flowing into European companies? The Savings and Investment Union is designed to make that happen. Measures on securitisation, bank and insurance investment and market supervision could mobilise up to €470 billion in additional investment. The next EU budget adds more than €450 billion through the European Competitiveness Fund and Horizon Europe, covering research, innovation, prototypes and industrial production.

The third battleground is the single market. Internal barriers in services, energy, telecoms and finance carry an economic weight equivalent to tariffs of 45% on goods and 110% on services. One flagship proposal stands out. A 28th regime called EU Inc. would allow a business to be created in 48 hours, for less than €100, entirely online and with no minimum capital requirement. Imagine that. The Industrial Accelerator Act would speed up permits, create lead markets for steel, cement, aluminium, vehicles, batteries and clean technologies, and use public procurement in a more strategic way.

Skills are part of the single market too. Nearly two in three SMEs say they cannot find the skills they need. The EU will propose a fair labour mobility package, a European Social Security Pass and stronger recognition of qualifications.

Energy is the fourth battleground. Prices in Europe are still two to three times higher than in the United States or China, and more than half of the energy consumed in Europe comes from imported fossil fuels. The Middle East crisis added over €50 billion to that dependence without adding a single extra molecule of energy. Europe already produces more than 70% of its electricity from low-carbon sources, and electricity currently accounts for only a quarter of final energy consumption. The Electrification Action Plan is designed to shift industry, transport and buildings onto clean power.

Grids need urgent attention. Last year, 80 gigawatts of renewable capacity were installed, and six times more capacity is waiting to connect. Ten terawatt-hours of renewable electricity were lost due to insufficient grid or storage capacity, enough to power three million households for a year.

Carbon pricing is also being recalibrated. Free allowances will remain after 2030 for companies that invest in decarbonisation. Industry bills could drop by almost €10 billion by 2030, and from 2027 an Investment Accelerator could mobilise €30 billion. The Industrial Decarbonisation Bank is expected to deploy more than €100 billion by 2030.

Artificial intelligence is the fifth battleground. Europe's strategy is to produce and deploy. To produce, the EU is investing €20 billion in AI gigafactories, and the first call drew 77 proposals from 16 member states across 60 sites. The Cloud and AI Development Act and Chips Act 2.0 will reinforce the chain from components to models. To deploy, AI needs to move into factories, laboratories, hospitals, energy networks, transport and public services.

The sixth battleground is openness, with fair terms. Trade agreements are now tools for diversifying supply chains, securing raw materials and reducing dependence on any single player. CETA, the EU-Canada trade agreement, shows what is possible. French goods exports to Canada have increased by 45% since 2017, and French services exports have more than doubled.

None of this happens without confidence. Europe has 450 million consumers, world-class companies, a highly skilled workforce, 20% of global R&D spending, high levels of savings and the rule of law. In a fragmented world, those assets are rare. The challenge is to combine them with determination, the same tenacity celebrated on the courts of Roland Garros. Victory belongs to the most tenacious.